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Greek crisis hits financial markets

Financial markets have fallen further as investors sold shares on fears about the impact of Greece's economic crisis.

London, Paris and Frankfurt opened with more than a 1 per cent drop, and Asian markets soon followed the trend.

The Greek Prime Minister George Papandreou plans to form a new cabinet to implement a debt restructuring plan. In order to receive bail-out funds from the European Union and International Monetary fund to prevent default on government debts, Papandreou must pass new spending cuts and state property sell-offs.

Protesters have filled the streets of Greece. More than 30,000 rioters encircled the parliament building, shouting angry demands for the resignation of legislatures. The protest grew violent, and the Greek police intervened with tear gas and more than 40 arrests.

George Floridis, Greece's now former deputy finance minister, resigned Thursday in a demonstration of his disapproval of the lack of economic reform. There is speculation that Papandreou may replace his finance minister George Papaconstantinou, known for his infamous budget cuts.

The debt crisis is made worse by the recent unemployment figure of 15.9 per cent for the quarter, an increase of 1.7 per cent from the same quarter in 2010.

Germany has suggested a restructuring of Greece's debt that the French and European Central Bank fear could result in a default with effects that would reach the entire eurozone.

France's three largest banks may face credit downgrade because of exposure to Greek debt.

French President Nicolas Sarkozy is encouraging other European leaders to come to agreements with Greece in an effort to stabilise the euro to continue growth in the eurozone.